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Survey: Chinese investors want more passives

A Hang Seng Bank poll shows that mainland investors are keen on increasing global allocation and on using passive products.

About 80% of mainland investors surveyed expressed interest in passively managed products, including ETFs. Among Hong Kong investors, the figure was 47%.

Rosita Lee, head of investment products and advisory business at Hang Seng Bank and director of mainland joint-venture Hang Seng Qianhai Fund Management, said in a statement that she expected an uptick passive product demand once investors undertstand such funds better.

The online survey, conducted by Nielsen in January, collected views from 2,400 mainland and 600 Hong Kong investors with investable assets of HK$1m ($130,000) or above. Another 30 qualitative face-to-face interviews were conducted with 30 high-net-worth individuals with investable assets of at least HK$10m.

Nearly 40% of the investable assets, or roughly HK$2m on average per respondent, are allocated into financial products, including equities, bonds, funds, foreign exchange, etc.


Average allocation of existing financial products

 Mainland investors  Hong Kong investors
 Domestic  72%  Domestic  77%
 Hong Kong  15%  Mainland  13%
 US  5%  US  6%
 Others  8%  Others  4%
 Source: Hang Seng Bank survey


The survey also found that 70% of mainland respondents and 55% from the SAR plan to increase their global allocation over the next 12 months.

Mainland investors prefer getting their global exposure in Hong Kong.


Where investors prefer to seek global allocation

 Mainland investors  Hong Kong investors
 Hong Kong  36%  Mainland China  20%
 US  20%  US  14% 
 UK  9%  UK  7% 
 Singapore  8%  Australia  7% 
 Switzerland  7%  Japan  6% 
Source: Hang Seng Bank survey


Stocks remain the most popular investment product among all surveyed investors, accounting for roughly 30% of investable assets, followed by mutual funds and bonds, according to the report.

But the majority of the investors have never used cross-border investment schemes such as the Stock Connect or the Mainland-Hong Kong Mutual Recognition of Funds (MRF) initiative.

Only about 35% of mainland investors and 15% from the SAR have experience buying the MRF funds, the survey found.

However, Lee believes that is set to increase.

“As demand for more diverse geographical asset allocation opportunities in global markets continues to grow among investors, we foresee an increase in the use of cross-border investment channels, which are becoming more sophisticated,” Lee said in the statement from the bank.

Hang Seng has an H-share index fund for northbound sale through the MRF scheme. The bank also plans to launch the Shanghai-Hong Kong-Shenzhen Emerging Industry Selection Mixed Type Fund through its mutual fund partnership with Shenzhen Qianhai Financial Holdings.

FSA reported earlier that demand in China is rising for Shanghai-Hong Kong-Shenzhen-themed mutual funds.

Mainland investors were also the topic of a previous survey from the Hong Kong Investment Funds Association. The results suggested that most mainland investors would like a fee-based wealth management model and are more eager to try using a robo-advisor than Hong Kong peers.

Part of the Mark Allen Group.